Absurd airfare pricing sparks increase in consumer complaints

Earlier this week, airfares to Hawaii from major U.S. cities temporarily dropped to as low as $420 round trip with no advance purchase or minimum night stay requirement. At the same time a round-trip nonstop flight from Minneapolis to Detroit returning the same day cost $1,160 two weeks away in September.

Welcome to the wild and woolly world of airline fares. The fare differences may not be new, but they are sparking more complaints to the U.S. Department of Transportation, which tracks but has little authority over them. In its latest Air Travel Consumer Report, the agency said it received 243 fare complaints for the first half of this year, up 12.5% from the same period in 2009.

Highest in fare complaints: Delta Airlines, which offered the $1,160 fare, with 63 complaints -- more than double the number of fare complaints of any other airline.
Midwest Airlines had no fare complaints and Frontier and Virgin America each had one. Airtran (with three), Southwest (with four), JetBlue Airways (with 5) and Spirit Airlines (with 6) boasted some of the lowest number of fare complaints among the large national carriers. Others didn't fare so well, including American Airlines with 29 complaints; United Airlines with 30, and Continental (which is soon to merge with United) with 24.

Among passenger gripes, fare complaints ranked eighth (flight problems have eight times as many complaints and baggage issues four times as many.) Still, the way fares are figured out remain a mystery to fliers with the fares charged on some flights seeming a lot like highway robbery.

Among complaints recently received:

Tuesday, the price [of a United Airlines trip from Boise to Kona, Hawaii] was $1,072. Wednesday it went up to $2,133!!! If there isnt, there should be a law that prevents PRICE GOUGING when they know you are about to book a flight, said one complaint.

My wife and son had reservations for round trip from Newark to St. Louis. Five days before the trip, my wifes grandmother suddenly passed away requiring my wife and son to change their trip to fly the following day. What was originally to be $418.80 for the 2 passengers turned into $1,542.80. Continentals pricing practices and market share position should be reviewed for consumer exploitation risks.

The Department of Transportation reported average fares rose 4.7% in the first quarter, compared with 2009. Charleston, S.C.; Detroit; Manchester, N.H., Atlantic City, and Albany saw the biggest increases while Milwaukee and Cincinnati the largest decreases.The most expensive route in the first quarter based on miles traveled was Boston to Philadelphia. Fares on the under-200 mile trip averaged $342.

The vast discrepancies that have been occurring with airfares recently can be attributed to a variety of factors, including consolidation among the airlines, a lack of competition from low-cost carriers, the possibility that customers can't easily switch to other transit modes; and sometimes, as in the Hawaii fare sale, battles between airlines.

"There are cost factors that affect whether airlines initially fly into a market, but once the airline has flights there, it's how many carriers serve a route, competition and which airlines" he says.

George Hobica, president of AirfareWatchdog.com, says that cheap $420 Hawaiian fare resulted from a battle between Delta, United and American after Delta lowered fares to United's Denver hub. Before the fight ended, all three airlines had cut fares to Honolulu.

Meanwhile, the high Minneapolis-to-Detroit fare was a result of another recent phenomenon hitting the airline industry: consolidation.Now that Delta owns Northwest Airlines, it practically rules the airspace between the two cities. The Department of Transportation listed the average fare on the route in the first quarter as $283, the highest fare for a route that is just 500 miles long.

"This is a typical thing that happens," he says. "They are gouging the business traveler, especially now that airlines have consolidated."

Fewer Flights and Other Alternatives

There are also just fewer flights for travelers to choose from. Rick Seaney, co-founder of FareCompare.com, says that after years of expansion, many airlines have drastically reduced service to cut costs. As a result, the number of flights available today is the same as it was in 1999.

"Historically, there was a 'grow or die' philosophy. Now, it's hunker down, reduce the number of seats and weather it out," says Seaney. "I don't think there is any rush to put more seats on until know the economy is better."

In turn that makes fare pricing far more susceptible to market conditions.

Despite the expensive flights being offered in some markets, the airlines know that they need to remain competitive. "During the recession, airlines have a motto. 'If you have a sale. We have a sale.' No one is going to be $1 more or less than the competition because consumers are watching their wallets like a hawk," he says.

When they don't have to be as competitive, watch out. "Smaller cities typically take the brunt of airfare increases" he says.

After U.S. Airways pulled 40% of its flights from Las Vegas, fares shot dramatically higher. Meanwhile, Southwest's entrance into the Minneapolis to Chicago market helped to lower fares from $400 round trip to $150 round trip.

What Travelers Need to Know

"In some peak travel times, the airlines will exact their pounds of flesh," says Seaney. "If you are looking to travel for the holidays, last year you could procrastinate. This year, you have to be proactive or prices will start to be in the $600 to $900 range instead of in the $300 to $400 range."

Seaney also says travelers should avoid fare shopping over the weekend and instead shop from Tuesday though Thursday. And, if possible, they should try to fly Tuesday or Wednesday in order to get the cheapest fares.